If you keep up regularly, then you may know I’ve been talking about what I thought could be the biggest Burn Notice Alerts trade of the year for much of the past week…
And we in fact scored TWO BIG wins to close 2022 and open 2023, entering on Friday and exiting Tuesday after the Jan. 1 holiday — more on those two wins later…
The first thing you should understand about Burn Notice Alerts is it is a contrarian trading strategy that holds positions overnight, entering just before the close and exiting soon after the open of the next trading day.
By contrarian… or counter-trend… that simply means I look for stocks — only big, liquid companies — that have been stretched too far in one direction in the near term, and we take the opposite side of the trade.
I give both a stock and option trade. Most of the time we enter the following month’s monthly options (third Friday of the month), not weekly, so there’s more volume and open interest.
I get asked this a lot so I will say that it’s of course a free country, so if people want to add more risk by going with cheaper options that expire that week, that’s 100% their decision… Just understand that if the trade goes against you, you’re likely to lose more if the stock moves against you.
Here’s how my strategy works…
Every day just before 3 p.m. ET, I look for specific signals that could lead to big moves by the next morning, keying on stocks with the most potential to hit a 20% gain with every trade…
No, that doesn’t mean we hit on 20% gains with every trade — more on the strategy’s performance below.
Let’s first discuss the two trades entered Friday… We went long (so simple call options) Amazon.com Inc. (Nasdaq: AMZN) and short (put options) Apache Corp. (Nasdaq: APA).
Here’s what I said in the alert about AMZN…
Amazon is one of the mega-cap stocks that has just gotten relentlessly hammered in 2022 (down about 50% YTD), and today it is outperforming once again on the downside as one of the biggest stocks in the market gets cleaned off many books. A bullish start to next week should see those same managers clamor to put some AMZN back on! No one wants to look like they just sat on one of the worst stocks in the market all year, which closed near year lows…. 2 Stars, trade last half hour. The bigger the names, the better with year-end Burn Notice.
We exited the positions over the first 1 ½ hours on Tuesday morning, ending by 11 a.m. ET. When all was said and done, we exited the underlying AMZN position for a 2.59%* gain, and a BIG 35.44%* gain on the option!
For our APA shorts, here’s my analysis from Friday…
Apache is one of the darlings of the S&P 500 in 2022, up 73% YTD and today in a big down market. With oil also down, our predictable compatriots in portfolio management are marking up the stock! I wish the market was up more so the stock could be even more overbought, but any weakness in crude over the weekend (a major possibility as China Covid stays front and center), and the first shall be the last in 2023… 2 Stars, trade last half hour.
And after exiting over the first 1 ½ hours on Tuesday, we hit on a 2.18%* gain on underlying shares of APA, and a 19%* return on the puts — exactly how I envisioned this playing out!
We want you to have all of the information possible and these two trades were bigger than our average gains, so now for the vitals…
Since the program’s inception on Dec. 15, 2020, Burn Notice Alerts has a win rate of 55.09%, and the average weighted overnight return including winners and losers is 1.64%. Add that up to four trades a week at minimum, and you can see how those gains can multiply through the year.
This strategy is, after all, a marathon and not a sprint. Click here for more information!
*Stated results are atypical for given period. Past performance is not indicative of any future results. Trade at your own risk.
**This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
P.S. WARNING: The Master Indicators is Flashing SELL these 3 stocks in immediately in 2023!
